Africa banks on cell phones

Millions to enter banking system through mobile phone system.

Michael Ole Sayo, a 24-year-old Maasai man, talks on his cell phone in Eremit, southern Rift Valley in Kenay. Cell phone use has spread across Africa's cities and rural areas and now cell phones will be used to allow Africans to bank electronically. (Tom Kirkwood/Reuters)

ACCRA, Ghana — Most working people here do not exist, at least not in the records of any trustworthy bank: The taxi drivers stash their salaries beneath floor mats and the market women tie their earnings up in the waistlines of their wrapper-skirts.

They are the “un-banked” — potential customers but for now invisible, lost among the 80 percent of Africans who do their banking in tin cans and fanny packs. They do not keep the sort of accounts one can present to a loan officer.

Africa's economy of cash handovers and stowed-away savings has long been a hindrance to the continent's economic growth, as well as a cause and excuse to deny credit to its poor.

But now, at a time when 10 million Ghanaians own a phone, the world's banks, cell phone networks and aid agencies are coming here to flip one thing into the other — to tweak a few features on a sim card, circumvent some regulations, and voila: The ordinary pre-paid cell phone becomes something not unlike a checking account — a way to text money from person to person throughout this intricate economy.

Already, telecom companies in Kenya and South Africa are shuffling millions of dollars in rands and shillings a day, as customers text along their excess income — perhaps to help an ailing but faraway relative buy medicine, or to pay workers harvesting a distant farm.

In March, the continent's largest cell phone network, MTN, announced plans to bring their Mobile Money service to 21 nations — they’ll even throw in an MTN-branded debt card. In Cote d'Ivoire, French telecom giant Orange is hammering out a similar program, and in eight East African nations, including the Democratic Republic of the Congo, the British firm Monitise, which is not a telecoms firm, will do the same.

“This is a way to include quite a number of people who are outside the reach of the financial system,” said David Andah, executive secretary of Ghana’s Microfinance Institutions Network. “I'm talking about that woman on the beach selling fish. People who are not linked up at all.”

Analysts expect similar programs to take off in most African countries within a year. They forecast that several hundred million of Africa's least connected traders, farmers and laborers will be brought into the banking system within three to five years.